A growing share of treatment rendered to injured workers in California is billed under unlisted codes that fall outside fee schedule pricing controls, creating a new and increasingly important source of medical cost growth, according to a new study by the California Workers’ Compensation Institute (CWCI).

The CWCI study, the second in a series on workers’ comp medical inflation, uses data from the Institute’s Industry Research Information System (IRIS) database to examine medical payments from 2017 through 2024.

The results indicate that while professional services and facility fees consistently accounted for about 70% of all California workers’ comp medical spending, the strongest inflationary pressures came from professional services billed under codes that are not listed in the state’s Official Medical Fee Schedule (OMFS), where prices often grew faster than applicable fee schedule benchmarks.

The study found that the average payment per professional service transaction increased 33.2% between 2017 and 2024, exceeding the 25.9% growth in the Medicare Economic Index (MEI).

Data showed that total reimbursements for unlisted professional service codes more than doubled during the 8-year study period, with average payments tising 106.7%, while their share of professional service payments increased from 5.6% to 14.4%.

A single code, 97799 (unlisted physical medicine and rehabilitation), accounted for nearly half of all unlisted professional service payments in 2024, with an average payment of $1,663 per transaction, the study found.

Unlisted codes for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) increased from 41.9% of DMEPOS payments in 2017 to 50.1% in 2024, surpassing scheduled DMEPOS codes for the first time.

Medical-legal costs surged following the 2021 Medical-Legal Fee Schedule revision, with average payments increasing 35.1% above 2017 levels by the first full year of implementation.

Medical interpreter expenses were driven by utilization rather than price, as the percentage of claims involving interpreter services nearly tripled between 2017 and 2024.

Pharmacy was the only major medical category to show sustained spending declines, largely due to reduced utilization following adoption of the MTUS Drug Formulary and opioid prescribing reforms.

Inpatient hospital utilization continued its long-term decline as inpatient discharges fell 33.8% from 2017 to 2024.

Scheduled professional services generally behaved as intended under the OMFS, with price growth closely tracking established inflation benchmarks, the data showed.

In contrast, the unlisted professional service codes experienced substantially higher price growth and increased utilization, while in DMEPOS, the growing use of unlisted codes was the key cost driver.

While the OMFS remains effective at controlling payments for scheduled services, its influence is diminishing as more treatment is billed under unlisted codes, the study found.

Given the increasing use of multidisciplinary pain programs, platelet-rich plasma injections, specialized medical equipment, and other unlisted medical services, policymakers and system stakeholders are likely to face growing pressure to address the widening gap between fee-schedule-governed and market-rate pricing, the report outlined.

CWCI has issued its study, “Medical Inflation and Cost Drivers in California Workers’ Compensation as a Report to the Industry”, available free to CWCI members and subscribers. Others may purchase a copy for $23 by calling 510-251-9470.